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Global credit markets continue to dominate the headlines and keep equity markets on edge. Below we take a look at 37 widely followed countries and how sovereign debt compares to each country's respective economic output. On average, the world's debt equates to about 58% of GDP; excluding Japan the world has borrowed about 54% of GDP.

From a style perspective, "emerging" economies have borrowed against 40% of GDP, while the average for developed nations is 74%. Yields on 10y notes are about the same across the board, with Pakistan, Venezuela, and Greece yielding 14.3%, 13.8% and 12.3% respectively.

We further summarized the debt ratings from Moody's, Fitch and S&P using a scale ranging from one to five, where a five is the firm's highest possible rating. The developed world averages the highest possible score of five; of those 19 countries only four received a score lower than 5 (Spain is not one of them). The highest rated emerging economy is China with a consensus rating of 4.7.

Well, not quite... Some of you may be wondering this morning why, if oil posted its largest gain ever yesterday and closed at $120/barrel sending the markets into a tailspin, crude is quoted at $107.60, down $1.81/barrel. Yesterday's price action was the most cut and dry example of speculation in the commodities markets we have seen to date. Contracts for October delivery expired yesterday, meaning anyone who was short those contracts would either have to cover their short or deliver the oil. A $25 spike was the result of hasty short covering before the market closed.

This morning's initial jobless claims number in conjuction with higher than expected CPI was disheartening as S&P 500 futures saw a prompt 10pt drop. The US job market continues to weaken, there were 450k new jobless claims last week and the previous number was revised up from 455k to 460k. The case for recession is getting stronger. The chart below shows continuing claims, initial claims and the unemployment rate through the last economic cycle. Changes during the two periods (2001 recession and '07 - '08 bear market) are shown below.

While a change in the initial claim number doesn't mean as much, we are seeing that more people are losing their jobs. The most interesting part of chart is in 2001 where initial claims were flat while continuing claims rose, showing that as jobs were lost none were gained. On another note, the stock market bottomed in October of 2002, after the official end of the recession, but at the peak of the job losses.

After making an intra-day high of $139.89 this morning, crude oil has drifted lower throughout the day, finding a low at about $133. The chart below highlights the upward channel that crude has held since the rally from $90 to $110 that began on February 2nd. From a technical perspective there is now support at $130 and $120, a broken uptrend is most likely to result in the kind of sideways trading seen between October and January.

The US Unemployment rate reported this morning gained 50bps from the previous month, and was 40bps above the economist survey of 5.1%. At 5.5%, unemployment sits at precisely the same level as the start of the December-07 expansion. Excluding the current period, unemployment declines 2.77% on average during expansions, and gains 2.67% on average during recessions. Below we highlight the unemployment rate and all recessions since 1948.

Yesterday's $5.49 gain in crude oil futures was the largest dollar gain since 1986, although in percentage terms for the same period the gain ranks much lower: 151st. Below we highlight the largest gains and losses in oil both in dollar change and percent change. As shown, when oil is up in dollar change the results over the next week and month vary, up $0.50 on average. When down in dollars oil tends to rally over the short term, and is up $5.62 on average over the following month. (click on the images below to enlarge)

The annualized GDP number came in slightly better than expected this morning (0.6% growth vs 0.5% expected) which was taken as a positive by futures traders (S&P futures promptly traded up 9 points). Oil inventories at 10:30 and the Fed announcement later at 2pm will likely keep volumes low this morning, but some indicators at least have signaled light at the end of the tunnel.

The US Dollar index has gained 3.2% since its intra-day low on 3/7/08, a signal that the Fed will soon stop cutting rates. With the dollar and analysts signaling a possible end of the Fed cycle (after today's forecast of a 25bps cut), and the market rallying on the news, long-term prospects for stocks seem good. This of course assumes that the large banks are through the worst of their troubles.

The Consumer Confidence index was reported at 64.5 earlier this morning, the lowest reading on the index since 3/31/03. The US markets initially traded down on the report, which was less than expected and 14% below the previous report. Initial reaction aside, the chart below shows that such negative sentiment occurs more frequently with a market bottom than a market top.

The table below highlights the average rack price of premium gasoline across 37 American states. The "rack price" is the price paid by gasoline distributors to fill up tanker trucks at a refinery. Currently premium gasoline is most expensive in Arizona, averaging $2.69/gallon, Oklahoma and Indiana currently sell the cheapest premium, averaging $2.31/gallon.